Nokia Shares Plunge After Company Reports Drastic Fall In Operating Profit For Q2

There has been a sharp decline in the operating profits of the Finnish information technology company Nokia for the second quarter of the current year. This was announced by the company in its interim report filed by the company earlier this week.

There was a fall of a very significant fall of 42 per cent in the operating profits (non-IFRS) at 334 million euros for the company for the second quarter of the current year compared to the same period a year ago. The company also reported net sale of 5.32 billion euros, which noted a drop of 6 per cent for the period year-on-year.

Poor performance by the Networks business of the company which is Nokia’s primary source of revenue was the primary reason for the slump in the profitability of the company.  This business segment noted the highest drop – and accounted for the overall drop in the operating profit (Non-IFRS) of the company, with a drop of 83 per cent. The net sales of the segment also dropped by 6 percent.

The bad performance in the Networks business was partly offset by the performance of Nokia Technologies which is another division o the of the company. This business segment noted an increase of 27 per cent in its operating profit for the second quarter compared to the same period last year. the figure in second quarter of 2018 was 292 million euros while that in the same period last year was 230 million euros.

The company missed market expectations badly in terms of its profitability. According to predictions of market experts, the company was anticipated to record an operating profit of 373 million euros for the three months from April to June period which was 35 per cent less compared to the same period last year.

There was aversive action by the markets after the announcement of the results. There was a drop of 9.1 per cent in the shares of Nokia at the Helsinki Stock Market where the company is listed on 26 July morning.

The forecast for the rest of the year was maintained by the company management and it added that there would be brighter prospects for the company’s revenue because of the upcoming commercial 5G networks.

“Nokia’s Q2 2018 results were consistent with our view that the first half of the year would be weak followed by an increasingly robust second half,” said Rajeev Suri, President and CEO of Nokia. The company expects that the in the second half o eth year, there would be some significant improvements in the market conditions, he added. The second half of the year has traditionally been the strongest period for Nokia and it is during that period that there is expected ot be acceleration in spread and adoption of 5G technology.

(Adapted from FirstPost.com)

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